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tv   Market Makers  Bloomberg  June 11, 2015 8:00am-10:01am EDT

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makers pickup i am stephanie well at 8:00 a.m. erik: i am erik schatzker. greece uncertainty means opportunities for some investors. stephanie: uncertainty over at j.crew. the retailer is cutting jobs and checking up management. erik: bloomberg businessweek has devoted to the culture of the people who make code. if you do not know code, here is a story that could help your career. that is what is coming. you know what else is new? can i see your folder for a second? stephanie: my notes folder? erik: folks, this is 70's folder and this is my folder. stephanie: clearly, it is in turn season at bloomberg. this is a reminder that we need to pay attention to our notes. i love it. beautiful. i will ignore the fact that my name is spelled wrong. it's ok. erik: time now for top stories.
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we begin with greece wants to buy more time with creditors and brussels tsipras returns for more meetings with germany and france. one greek government official says tsipras once a nine-month extension to the bailout program and they say pace is picking up. >> a friendly, constructive discussion as always and we decided to intensify our efforts to bridge the remaining gaps. we will move forward toward a solution. erik: meantime, german chancellor is putting pressure on tsipras. she told him it was time for him to back up his good intentions with actions. the house is beginning to days of debate on the asian trade agreement. president obama is seeking fast-track and republicans are on board. it could come down to how congress decides to pay for returning workers. stephanie: south korea's central bank has cut key interest rate to a record low because of the threat by the middle east
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respiratory syndrome. the bank of korea says that outbreak poses an imminent threat to consumer spending. the disease has killed tens out -- 10 south koreans and put more than 3000 in quarantine. one big change for bill clinton if his wife gets elected president -- he will lose a large chunk of his income. at the clinton global initiative in denver, betty liu asked him if he would feel good -- if you would get paid for speeches if the -- if hillary is in the white house. >> i don't think so because once you get to be president, you are making a daily story. i will still give speeches on subjects i am interested in. i really enjoyed those thanks. stephanie: he really enjoyed those things. he also suspended his foundation and a donation that received for foreign government. he said allegations like countries like algeria got influenced by donating our "incredibly misleading."
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erik: the stanley cup finals are tied up. chicago scored in the third period, 2-1. game five is saturday night in tampa bay. stephanie: did you happen to see that? erik: always. stephanie: a true hockey enthusiast. we will take you to vonnie quinn who has breaking news. vonnie: yes, in fact, we have a deal in the energy space today. hes is excelling 50% on midstream assets. they could create a midstream joint venture and it will be valued at $5.35 billion. hess sees the cash proceeds at $3 billion including debt issuance. hess will retain operational control at midstream assets, so yet another deal. again, 5.3 $5 billion is the value. we are not releasing anything happening in early trading just
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yet. erik: thank you. let's get you started on this morning with five things you need to know right now. we begin with greece, stocks up more than 7% today. the biggest jump since february. this comes as prime minister tsipras continues to talk with greece's creditors. there is another thing to add to this conversation about greece and that has to do with the point of view of standard imports. it is important and so is moody's because if there is a default, they are the one who was going to say, it is in default. stephanie: technically, it has to fall into the category defined by default. erik: exactly. kramer was on with colleagues in europe earlier and here is what he had to say about a greek default. >> i miss payment to an official creditor is not officially a default in the eyes of standard. what we are really looking at is the ability of the default on liabilities of the greek government to commercial
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creditors meeting bondholders or banks. stephanie: ok, but this is what kills me. this is the absurdity of it. greece could be in a horrible place but investors are not going to care because unless it triggers a default, we are not going to have an actual event. but it does not change the fact that fundamentally this has serious problems. erik: that's true. stephanie: number two, opec biggest members are pumping a number -- a record number of crude threatening this year's rally. according to the international energy agency, saudi arabia, iraq, united arab emirates produced record amounts of oil in may. this is crazy to me. we finally have seen a rally. all of this has to do with supply and demand and they are basically saying, forget that. we are just going to keep pumping. erik: who question mark opec? stephanie: erik: yes. no, it's not about what they say, the truth of the matter is opec regularly reaches its own
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quotas. iraq is part of opec but does not actually have a production quota so that is always a swing factor. stephanie: it is what you do and what they are doing is not helping the supply and demand situation. erik: unless you want prices to go down in which case they are helping. stephanie: that's true. let's head out to julie steinman. she has got number three. julie: i am looking at eco-data. you will get retail sales for may, weekly jobless claims and i want to concentrate on retail sales because they have been disappointing recently. meeting a lot of economists to question where the money is going and if people are earning more, getting gasoline savings, maybe they are just putting it in their pockets and not spending it? we could be looking at the largest monthly increase in more than one year, month over month, 1.2%. a lot of that looks to be auto sales, so it will be important to back those out and see how the underlying numbers look. stephanie: i like to make the argument that maybe americans
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are deciding to become the sabres. julie: so much faith. stephanie: i have faith in number for even if no one else does. after a sales decline, j.crew is shaking up their business. the retailer has named and you had of women to design and will eliminate 175 jobs from its corporate headquarters right here in new york city. j.crew, i am not saying they completely lost their way, but with the explosion of fast fashion, there are so many new retailers on the scene and j.crew is an iconic brand but not the go to it once was. they need a shakeup. erik: people talk about mickey drexler being a retail wizard. i want some wizardry. stephanie: he is. think about it, consumers have become addicted to sales. they have become addicted to coupons. when you walk out of bloomberg headquarters, you have got gap, banana republic all day and every day things are on sale. we have trained our retailers that we do not want to pay retail. that's the problem.
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for them, not for us. erik: i've got to play with number five is because you will love this one, stephanie. it's talking about jpmorgan's chief -- stephanie: i do love this one. erik: jamie dimon, the ceo, is snapping back for one of the critic -- leading critics in the bank industry. he says he does not know it senator elizabeth thoren the global banking system. warren has said that china things, including j.p. morgan perhaps, should have been broken up after the financial congress -- financial crisis and regrets commerce has not done that. she has not responded to his remarks. stephanie: here is why i love it -- often times, ceo of publicly traded companies are so on message. they have their talking points. but jamie dimon cannot help himself. he has got to keep it real jamie dimon style. there is no upside. julie elizabeth warren to get even angrier and have more negative feelings toward the industry but he cannot help himself. maybe he is simply frustrated and the voice of the industry?
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erik: let's say for moment he is right. i'm not saying he is but let's say he is bright and elizabeth moore does not understand the global banking system and let's say other critics of regulators are right and people like d'angelo don't understand the banking or insurance system. of what bio is it to your point to actually say that publicly? stephanie: and antagonize her? there is no point whatsoever. she may not understand it, but the public does not either. erik: we need to move on. you might say it brings new meaning to keeping the family when bill gross left him go in september, the markets anticipated that the total return fund would be forced to dump some of the holdings because with bill gross' departure, everybody knew some clients would withdraw some of their -- not really deposits but investments in the total return fund. instead it happened under the
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same roof and took place inside pimco. we have helped to explain, it is like internalization goes on inside a broker's house. instead of having to dump securities onto the secondary market and if you like them having to buy them back, you just do it internally. mary: exactly. there are institutional and infrastructure things when you are doing this classic selling you know the sec will be on your back at some point so you want to make sure it is done in good faith and you get the right votes. that being said, certainly it needed the response in markets. everyone was circling pimco and people were trying to get a feel for what positions they had and where and how to capitalize on that. there was anticipation of a big move and it kind of never happened. this is about 18 billion worth of securities and that total return happen to be selling and pimco happen to be buying. erik: pimco quickly, -- clearly is the winner because if they can save itself money and consequently clients money by
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doing these traits internally that is a good thing. good for pimco, good for the clients. is there a loser? mary: it is interesting because the person that came to mind was we all looked at this as an exercise in architect stability and everyone expected this huge crash and what would this mean for liquidity and bond if you had all this money trying to race through the system? we did not really see it that hey, everything is so stable. this is so orderly. sure, it went really well and pimco return managers did quite a good job managing the liquidity demand. at the same time, i feel cheated like we did not get the full impact as there is 18 billion. erik: it was a really tested. mary: exactly. stephanie: he doesn't have to be tested. they were working with the confines of market regulation. mary: absolutely and that happen to work out in this case. you are right, it turned out fine. it is an interesting exercise to think about. if it had been a giant fund without the backing of other
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funds it just so happened that we had this kind of support network. if it had been a 200 billion dollar fund without a family around it, what would have happened? it's apathetic also does not matter, but -- stephanie: i think -- erik: it's smart what it appears to be. thank you, mary. mary childs. coming up, once upon a time it was a darling. stephanie: now, now i can get my words out. now, guilt has downsized and we will find out why. ceo on how she plans to keep that company growing. ♪
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erik:erik: coming up on bloomberg television, wisconsin governor scott walker has an interview with at 5:00 p.m. eastern today on "all due respect." stephanie: time for top
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headlines. erik: british government will start selling in the royal bank of scotland. chancellor john josh george osborne said the government will probably lose money on this deal and recall that the uk's spent $70 billion bailing out rbs during financial crisis. in return, taxpayers got a stake in the bank. the ceo of jcpenney has laid out plans for how the struggling chain can thrive. his vision includes cutting supply chain costs and having stores connected more closely to the web. the former executive of home depot is now in the third year of a turnaround after the disaster of ron johnson. nike already has shoes on most nba players and now the uniforms will have the famous swoosh as well. the company is replacing adidas which decided not to renew its agreement with the nba. nike will become the first apparel sponsor to have its logo appeared on a uniform designs.
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those, stephanie, are the top headlines. stephanie: we will go back to a story i had earlier. j.crew cutting 700 -- 175 jobs after a disappointing first-quarter results. consumers getting more averse to painful price and j.crew has declined 10% from last year. joining us now is the ceo of flash sales pioneer michelle peluso. welcome. when we see headlines like this about j.crew and the fact that the consumer, me included, has become addicted to sales, who was to blame? michelle: consumers want a few things -- excitement. it has always been about exciting, fun social. they want a point of view. they want -- they don't want to come into a huge market place they want value and a great deal. that is what was the founding principle of guilt and remains true today. when you look at retailers, they are struggling but they are
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growing in digital and off-price. stephanie: we see in high-end designers making mass-market lines. but j.crew has tried to do is begin -- from being a mass-market brand to getting into high end. can you do reverse do consumers respond? michelle: i think j.crew has already had a great point of view. it is a company with a great dna and i think they can move out. women love dressing high load. they love for a great designer with a j.crew piece. stephanie: but they consider that great designer to be j.crew. do they want to buy a $400 shoe from j.crew? michelle: i think that's the question -- is there enough pedigree in that brand to go that high? they have done an astounding job in moving that up over time. that $400-$600 buys point, not sure if they had the dna for that. erik: is it j.crew's problem their own making or the whole industry is struggling with? michelle: i think all of us are thinking how do you give that
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additional five to the consumer and i think stephanie said it well -- the consumer has been trained him and not just because of gilt but because over the last 10-15 years, they have been trained by the internet, transparency, searching quickly and to look for things at a better price. stephanie: it is possible -- is it possible to reverse that? i was in the store the other day and i saw items i bought the week before on sale and it depressed me. it was not the total price, i'm not sure if i noticed but the fact that someone else was getting a better deal. can we reversed that? michelle: i think one of the great things about the internet is transparency and ease of access. 15 years ago, if you had your mall, your store, your driver and you were going to buy. now, you go online even when you are in the store and checking pricing everywhere and you are looking for that deal. it is so easy. stephanie: so what happens to the person if you are gilt? michelle: we are always about
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it. you and discounts and that plays in our favor, but i think all of us have to reengineer and think about ways of the whole notion of critical and we can't have those physical store footprints consuming as much resources as we do. the question is, how do we streamline our cost structure and provide the consumer with the great value? erik: it's not as though things have gone perfectly for your company either. some of the struggles of you have had to deal with as a ceo and pressures you have dealt with are pretty well documented. what are you doing differently now to try and make your company go up? michelle: retail is always a challenge and an environment of getting better. for us it is about providing more of a point of view, introducing new brand, editorial. from london who does not have a presence, france, great brands that temporarily do not have that u.s. established presence. our customer wants designers, she wants a point of view, she wants an editorial. she wants to know what she is
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thinking, what designs are inspiring her. telling more stories. secondly, she wants style and it eyes. he had been doing things like "shop the look." if you see a great pair of jewelry and shoes and assured that you never would have, we let you buy that whole outfit. creating a sense of style. stephanie: is your consumer responding? because in general, we are not seen across all consumer spending -- we are not seeing it hit. even it she likes her editorial, are you seeing results? michelle: when we showed something different, we saw growth and that's encouraging. i think retail overall had a tough first quarter and luxury even more so. i think the consumer is still being cautious and having said that, the parts that are growing and gilt fits into this are off prices and digital. those of the trends we work hard to play into. stephanie: we will take a quick commercial. we will be back with michelle colusa, ceo of gilt after the
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break. ♪
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erik: that is what peaches look like. we are minutes away from the latest retail sales numbers. michelle colusa, ceo of gilt, conveniently, is still here. stephanie: nike really was a slamdunk in the last 24 hours. adidas walked away from the deal with the nba and they could not make any money. why does it seem that nike can? the shell: nike has an amazing track record. they have sponsorships of the best games and players. it is a competitive edge for nike. stephanie: don't you think that nike has a big opportunity with
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women right now? just last week, we saw them absolutely crush it. is nike say, how did these guys come out of nowhere? erik: i would not say nowhere. stephanie: not nowhere. but think about how long nike has existed and now lemon is every woman's -- erik: yes. michelle: nike has a lot of passion and conviction for the women and women athlete. you are seeing new commercials, new designs, new sponsorships. i think nike will make some moves in this business. erik: as the director, are you worried about nike's exposure in the fifa scandal? michelle: first of all, it is a privilege to be part of the company. they made it clear that they oppose any forms of bribery or regulation and they are cooperating. speaking of fashion, have you seen the skyhigh wedges -- and you shoot to get from nike? stephanie: the high heels that
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are a sneaker and a wedge -- michelle: and they have them in gladiator sandals. stephanie: does this speak that -- to this active leisure, women are attaching sports were to fashion? the shell: you see it on the runway. you are seeing a trend of mixing this high-low and wearing a fabulous product dress and the gladiator nike skywards sandals. erik: yes, but not easy to pull off for some people. stephanie: not for me. erik: it can go catastrophically wrong. michelle: that is why you have to turn to gilt to make sure you get it right. stephanie: when you tell me how to shop the look, don't you run the risk that i will take your editorial and go elsewhere? i will walk downstairs and go to top shop or a=za== -- zara or h&m? i can browse from you and buy from someone else. michelle: there is urgency at gilt.
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there is a good chance it will be sold out if you wait. so you have to come for an appointment at noon and if you wait too long, it will be sold out. we work hard to try and make sure you are finding pieces you cannot find elsewhere. designers from europe you are not seen at the top shop send h&m's and there is a bit of urgency. you got to move. erik: so many of the nations larger and more successful retailers learned a little too much from your success? gilt's early day success? how do you track the business that you are losing to nordstrom rack for example? michelle: we have humility about every single day -- and retailers especially -- how do you get better? every day is a whole new store at gilt. we track for flash players, total retail and we want to make sure we are seeing growth above total retail, of course. more than that, the nice thing
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about running a place like gilt you have so much they then you can see how many people came to the site, how many people looked at the sales, how many people put things in the cart. that is critical to us. stephanie: take your data and look across the board how retail sales have been down -- what do you make of it? michelle: i think the consumer is being cautious. she wants a deal, holding back a little bit. it's that session we go through. stephanie: will we break that? michelle: there's a lot of skepticism but let's see what may does. at some point, she will come back. erik: what percentage of your sales are two women and what percentage are to mail? michelle: 32% are to women and the rest is between women's business and the rest is between men home and kid's business. stephanie: is it mostly men buying for women -- women by four men? michelle: women sort of dressing
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the man and aspirational the dressing the man, at gilt 70% of our men store sales are from men. and that is because we have an urban global war the customer who has a point of view in style. stephanie: don't go anywhere. retail figures are out. i want to go to vonnie quinn where she can break it down. vonnie: as we forecast 1.2% for retail sales which is seeming like a strong number but you have to remember we are coming up six months of really weak sales. the number is 1%, better than the forecast for .8 of a percent. oil and gas is the number we really look at an better than forecasted as well. up .47 percent. we are seeing a little reaction. the treasury market is seen selling up for the 2.47% for
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the 10 year. futures are higher. also, the initial jobless claims came in at 4000 more than forecasted last week 279,000 initial jobless claims were filed. the continuing claims number that rose just a little bit for last week. that is economic data. stephanie: thank you, vonnie quinn. michelle, what is your reaction? michelle: i think that is a we expected. it sounds a bit pace is better from the first quarter but it is still nothing to write home about. erik: what number would you write home about? michelle: it would be great to see if the percent-4% climb. that is what we are hoping for. we know that otto has been doing well and it would be fabulous to see if the percent to 4% number. -- two ca -- to see 3% to 4% number. stephanie: thank you so much for joining us. it is time to give you our top
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stories of the morning. this may be a wake-up call for greece. the president of the european union says it is time for decisions not more negotiations. donald tusk says the greek government needs to be more realistic. greek prime minister alexis tsipras said he would not impose more austerity measures in exchange for bailout money. tsipras is in brussels today meeting with european officials. a big, big deal this morning involving the oil field hess is excelling at 50% stake in their pipeline and the buyer is private equity firm global of partners. the price tag -- a cool $2.7 billion in cash. cash. the company will form a joint venture and gess== -- hess was the most active driller in the balkan last year. erik: apple is giving users the power to block ads. it is part of their new operating system where they can download an app for safari
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browsers to block pop-ups on most sites. the system will be launched this wall. here is a question i know stephanie has been asking -- what sort of point was osama bin laden into? there have been reports that they found a hefty stash of pornography. from a men's publication called "the bro bible." there was a request filed to ask what exactly they found what they say, sorry, the information is classified. stephanie: i'm side, can you blame the guy? living in a cave all that time -- what else is he going to do? erik: he was living in a house. stephanie: still, he could not go out, could not go to sporting events. erik: somehow we have found a way to feel sorry for osama bin laden. [laughter] stephanie: there is never, ever, ever going to be an opportunity for that. i'm just saying. i'll move on.
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next, we are talking to the king of diamonds. that is my kind of guy. stay with us. you are watching "market makers" right here on bloomberg television. ♪
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stephanie: welcome back to "market makers." you are looking at a beautiful day in london. we are having a beautiful morning in new york city talking about something quite special. a kiss on the hand might be quite continental, but diamonds indeed are a girls best friend. now more than ever. according to the global demand for diamond jewelry is going up up up. totaling more than $80 billion in 2014 with a 7% pop, the u.s. is leading the way. what do they have planned to keep demand surging in the years ahead? let's find out from stephen the head of marketing who joins us
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now from london. good morning. clearly you all are having a great run. what do you attribute this to? is it the rich getting richer? the 1% making more and more money through this quantitative easing? steven: actually, we are really pleased it is not just the absolute market. one of the things really driving the american market is the strength of that classic diamond engagement ring. the tradition in america is as strong as ever and interestingly, we are seeing some new habits. people looking for fancy colors for branded designs. they are helping to drive a higher average price as well. stephanie: you got to be pretty rich. stephan: the auto market is still the foundation. erik: the millennial overloaded with student debt, where do they find the money to buy an engagement ring? stephan: the data is rocksolid.
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really, the last 20-30 years in america, we see each year about eight out of 10 people who get married market with the diamond engagement ring. i think why? i think they recognize this is a once-in-a-lifetime purchase of something as important as the symbol that they are going to have forever and they are willing to prioritize that particular purchase. it is so special to them that it moves way up the list of products that they want. stephanie: i concerned at all around class warfare and the gap -- excuse me, the wealth inequality situation we face? we just saw at the business summit, the chairman of card game saying -- the chairman of cartier said he was concerned. we could be in a situation where one may not want to wear fancy watches and diamonds around people when unemployment is a big issue. when there are so many people as erik schatzker said, people
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sitting with so much debt? stephan: i think the difference in diamonds, particularly, if you look at the whole market and not just the very top end, the cartier of the world, diamonds, particularly when it comes to important occasions in life, they are much more about the emotional symbolism then they are, to me about displays of wealth. when they are given for things like weddings or important anniversaries or the birth of a child, then they are symbolic and they come in a wide range of prices. you do not need to spend thousands of dollars to have an important symbol with a diamond. stephanie: hold on. my husband would love -- but diamond can you get for less than 1000 -- thousands of dollars? stephan: if you go to a jeweler like kay's, they have a wide range of diamonds even below
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thousand dollars. it's nothing you have to be super wealthy. you just have to believe in london and commitment and that is really what the diamond is to the american consumer. erik: if i wanted to buy a one carat diamond, according to the wealth of data in the bloomberg terminal right here, it would cost me a little more than $7,000. that is down by some 40% from 2011. how does -- how do you keep diamond prices from plummeting like that? stephan: we don't see that picture in the diamond market at all. if you look back over 10 years, you would see pretty strong growth in diamond prices. if you look at the medium qualities which most americans are buying on a regular basis for things like bridal or anniversaries, then you will find that the price growth over that period has been pretty good. at the end of last year was a little bit soft on pricing but
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there was a strong increase in the first part of the and the second part was soft. now we see that prices for those goods have plateaued. interestingly, i just found at the big auctions in the far east in geneva, this past week, they have really large and rare diamonds and you see record prices being paid. people are prepared to pay for rarity. stephanie: isn't that the cost that .01% of wealthy people are becoming exponentially richer right now? stephan: at the very top of the market what people are looking for is to invest more in things which are casual offsets and have it inherit rarity. whether it is the art market as we saw a couple weeks ago and new york or for these really rare and exceptional diamonds people know the world is not making many of them and making it less in the future than it did in the past.
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find something with really an inherent rarity and inherent value that i think people think it is a good store of value for the long-term in a turbulent world. stephanie: thank you so much for joining us. stephan lussier head of marketing. erik: coming up, we take computing coding seriously. we are talking 30,000 word serious. we are going to decode words for you when we come back. ♪
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stephanie: coming up in the next hour, top democrat on the services committee, congressman adam smith will ask him about u.s. plans to fight islamic states. erik: the longest piece ever written for bloomberg business week, more than 30,000 words. so long it takes up the majority of our annual text addition. that is what it looks like. the focus is coding and that man who wrote the piece is here. he is business week programmer
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and let's bring up that cover again because it's seems to me like a good place to start. this code on the cover -- what does it say? >> unfortunately, the definition is not good enough to read it. >> i can tell you because i wrote it. it defines an issue. it uses a program language called python three and there it is. it creates a class -- ignore that -- but it creates a thing called an issue and we go ahead and create one in the code below. we say, make an issue called "business bloomberg week" and it is $5.99. there are notes to come back and figure out other currencies because i wanted it to be realistic, so it is incomplete, perfect code but it runs and when you run it, it publishes business week. stephanie: i want to talk about why this is important to talk about and explain. josh wrote to us in a summary -- this piece originated from my
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own ignorance. i have been thinking my way through web meetings for 12 years comprehending some things and being completely be welded by others. not acceptable anymore. i, my brother feel the same way. walk us through this. what does it mean? >> the code question mark stephanie: besides the fact that we want all our children to do it. >> when a programmer starts the day, they may have a meeting and talk to other programmers about pieces they are working on and eventually, they will go to their computer and write script script, script. it will write little lines of codes, individual lines, individual commands and then they will try to compile or execute them to make them all run and if enough people did that and work together and merge all of those little things together, that is how software is born. stephanie: and creating what? paul: an app, a website, a back end for a website that lets you log into the website. stephanie: take us back 100 years before any of this
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existed. explain to me in pencil and paper and rock and chisel what the equivalent would be. paul: this is all new. we are in a new world. back then it would be -- i would come in and i would make some notes on a note card and i would go put that in a giant index card database and someone else with update the index to all the indexes -- think about the giant library. erik: i think i get your question because it is my question, too. what would today's code or have done 50 years ago or 70 years before the advent of the computers? paul: i think about this question constantly. there was no real answer because the whole -- erik: because a coder is highly evolved form of life? paul: they just react to technology. math petition, library, computer does refer to a human being. the original computer wasn't
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someone who would sit and do mathematical operations. stephanie: 12 computes. paul: exactly. and they would do complicated equations. erik: they say doctors should not run hospitals because doctors are good at making people get better, they are not good at running organizations. what about coders? should coders run companies or should managers fund companies? stephanie: is it fair to say a coder cannot be a manager? why does it have to be one dimension? erik: same reason about doctors. paul: but some doctors are good. this is a problem that has been going on forever. programmers get promoted because they want to level up and they are great coders but terrible with people. it is a well-known problem. some people are natural managers and find their way up. very often it is a tricky situation because people get caught. they want to keep programming and they need to move up. stephanie: welcome to wall street. i want to introduce you to my friend jon corzine.
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paul: -- erik: i guess mark zuckerberg is in the back of my mind to cause himself a programmer but recognized he needed some of the bedside manner that he lacked and got some. paul: that is the thing. he has enough self-awareness to know that he needs an adult and he went out and got one. that many adults. stephanie: what is your biggest take away? 30,000 words? what are the 15 words i need to know? paul: talk the way of managing coders, google it. search and learn python. spent two hours learning it. and talk to your coders. get started. erik: can anybody be a coder? paul: yes, anybody can be a coder. stephanie: yes, you can google that are read this week's issue of "business week" because paul crushed it. our friend, paul a coder and
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journalist. paul: thank you so much. stephanie: now we will take a look at markets. let's go out to our senior correspondent julie hyman taking a look at the analyst action this morning. you started with an interest compromise, motto, nice shirt by the way, -- julie: the strategies of their and this is a strategy, that a single stop car -- a stock car but he is looking at a bubble. he says there is a 60% to 70% chance that a bubble good form in the u.s. and he said central pencil likely key policy abnormally and he looks at the last two supply driven oil shocks and said there were bubbles after that. there is a risk here that the markets could contract -- correct 2% to 9%. again 60% to 70% chance. however, he says we are not yet in a bubble. he is looking at a number of different indications but one is valuation. if you look at my bloomberg terminal, i have a graph of the s&p 500 index versus its forward
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price-to-earnings ratio. the price earning ratio are these orange bars, the s&p 500 is the white line you are seeing going up and up. he says when this -- linda pe tends to get more toward 23 or so that is when you are looking at potential declines and stocks. you saw it happen back in 1999 when you saw an elevated level. if you look way over here, we are not at that elevated level in the pe right now. he says that is one of the reasons why he is not as concerned. of course, the key word is yet. there is not that level yet. erik: thank you, jolie. meantime, the 85 billion dollar question for chevron shareholders. the companies to massive projects in australia -- will they pay off? liquefied natural gas, that is what bell -- it is supposed to be a large chunk of chevron's growth between now and 2017. the projects are not just
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massive in australia but they carry big risks. follow me inside one of the world' is largest natural resource project. ♪ [indiscernible] erik: 37 miles off the coast of north australia, here, on a remote island with no full-time residents chevron is building a $54 billion liquefied natural gas went. everything about it is on a scale that defies description. this stuff is massive. and or miss. >> it is the largest project chevron has ever undertaken and the largest resource project in australia. erik: gordon is on the faroe island about 700 miles north. the sister development is on the mainland on the australian outback. together, they will produce about 12 billion cubic feet a day of natural gas. >> i see what is happening in
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the developing world and i see what their needs are. they need power, for example. it's going to come from natural gas. erik: both projects take as pumped from undersea deposits, clean it, freeze it, and loaded onto tankers bound for japan and elsewhere in asia. >> what are we looking at here? >> you are looking at an lng tank 92 meters in diameter, 47 meters tall and this will be full of liquefied natural gas. we will fill it up every couple days and fill this tank. that is big. that is very big. erik: wheatstone's set to start in 2016. so far it it is on target. gorgon was greenlighted at -- is widely overbudget and one year behind schedule. >> it will follow the harvard business school to want to put a project for a key study of what
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not to do. g that would ber -- that would be gorgon. >> the cost of goods of services has more than doubled and we saw the australian dollar grow rapidly and certainly, the cost of labor were higher that we expected. we also had more cyclones that went through. yes, cost when a but we think the gorgon project will be a nice country leader for a long time to come. erik: that is the full special tonight -- "inside chevron" 7:00 p.m. eastern time and 10:00 p.m.. stephanie: you can watch it twice. watch it again at 10:00 p.m. what am i doing right after the break? i will be talking to you about shares and the biggest u.s. airliners on a decent run. we will talk all about that. taking a deep dive into the industry and will talk more about overhead compartments.
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tight seats, not comfortable. ♪
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♪ >> live from bloomberg headquarters in new york, this is "market makers." erik: good morning, everybody. we're in for our second hour. stephanie: i will say the first hour was our appetizer. it is now time for the main course. i'm excited about paul ford's business cover. as a mom in new york, everybody toss the kids and their classes. think quick what does it mean? i double dog dare you to answer it and i bet no one can. erik: top stories. stephanie: americans resumed
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shopping last month. retail sales rose in the month of may, matching analysts expectations. auto dealers, clothing and material source. sales barely roast in april but consumers may be encouraged by gas prices that are still lower than they were one year ago. ahead of the european union a warning for greece. quit playing games with your future in the eurozone. donald normally plays the mutual broker. he is now telling greece to cut a deal at a meeting next week. donald tusk: i'm someone who says the game is over in fact. the upcoming eurogroup meeting is crucial. it should be decisive because we
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have more no more time in -- we have no more time. stephanie: met through the night with the leaders of germany and france. erik: sentenced to life in prison after a secret trial. he pleaded guilty to leaking state secrets. an impact on business. here is cantor davis in hong kong. >> he was also an oil industry -- four years. no one will make any decisions because they are really scared of this campaign and it is making it more difficult for the outside direct investors to figure out what is going on or get anything done.
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erik: the agency says he took $21 million in bride -- bribes. now it looks like the end of the first couple of springfield. homer and marge will split up next season. no word yet on how bart and lisa are taking it. stephanie: the show has been around for a long time. they need a new angle. forget who homer will get together with. marge is one hot chick. i would like to z who marge meets. marge and her tito's sisters hitting the town. think about it. oil prices jumped to a fresh 2015 high yesterday after u.s. data showed stronger than expected demand. this morning, we already see a different story. we have got to find out why. let's bring back julie hyman. julie: i wanted to talk more about marge and homer. stephanie: homer will get a
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girlfriend and it will be lena dunham. let's hear it marge -- julie: i say she will go back to the french bowling instructor. i do not know if you ever him. stephanie: i want her to go high-end. no groundskeeper willie. julie: oil is indeed following today. we have the international agency coming out and we are seeing this year's price rally because of all of the production we're seeing from opec companies. oil jumped a little higher. the supply is still a problem. you have got saudi arabia, iraq all pumping record amounts of oil in the month of may. then we saw oil come off the elevated levels. want to look at our bloomberg terminal at oil and sees your
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today. -- see year to date. it is indeed a rebound. the line is drawn at $60 per barrel. every time we bumped up above that, we have not been able to sustain that game. that is really around the price it should be, at least potentially. the differential we have seen between oil and oil stocks has been an interesting story this year. oil has risen by 14.5% as i mentioned. stocks have fallen. we have seen a bounce over the past couple of sessions. overall, energy shale -- shares have dramatically phone. erik: i showed you an excerpt of the special i did on chevron. but a lot of this is a
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conversation i had with the chevron ceo. we had a sitdown interview. it's been a long time talking about the oil price. here is the ceo chevron on where oil is heading in the long run. >> we are more likely to be at the $75 level. before, we were more likely to be at the $43 level as a long-term point of view. the complexity of oilfields to be developed to meet demand, it will take higher prices. you will not be held to do arctic and deepwater drilling and all the different classes of oil development at $43. some will be economic in those areas, but it will not be sufficient to meet the demand we expect. that will tend to drive prices to level where investments can be made where you can earn a fair return. erik: what if it does not happen?
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>> it will we are paid to judge politics and technology development. foreign exchange rates changed dramatically. we have to make an assessment of all of those things and come up with a root -- a view of what we are investing. erik: getting it wrong is expensive. john: it is. it has come at a faster pace than i think many expected. one thing that does not always come across is a capacity in the world is actually very low. if you look at $20 oil, there was 10 to $15 million -- barrels per day. it took a long time to be worked on by growing demand. if you look at what has happened today, we have not seen an increase in spare capacity. erik: a lot of the calculating
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and forecasting that goes on has to do with supply. how much oil can produce at a certain price. what out demand? what about the possibility that cheap oil extends the hydrocarbon era by stoking demand and making renewables less complicated? john: to some degree, that is happening today. we are seeing higher consumption elsewhere. the overall view has not changed much yet that that is partly due to other factors that have weakened the expectations of weaker growth around the world. it will make it tougher for other sorts of fuel that will compete with oil. that is how markets work. erik: you can catch the full special report tonight. a lot of my interview with the chevron ceo, plus much more on shale and fracking, australia tonight.
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stephanie: megaprojects. when we returned, we are talking vulture investors ready to swoop in on greece. they are betting greece can avert a crisis. we will take a close look at whether greece is really europe 's best investment. stick with us. ♪
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stephanie: welcome back. it dark. that is washington dc -- washington d.c. circling over greece and making a big bet that greece will avert the crisis and strike a deal with creditors. time is running out and there is still no deal. why do they think greece is europe's is best investment? less gas the ceo and chairman of
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emerging markets hedge fund that indeed owns greek debts. >> starting off with the word vulture fund. i would suggest a vulture fund would be more can to god and you are picking a bone. the fun looking for a good return -- a distress investor who julie understands great value, why don't you walk us through what is happening? i will turn to you. >> that that is everything will turn out fine. it will be a bumpy road but it will all work out or no one knows the way, but it will eventually work out. the bonds are trading at 50. the downside is so little compared to the upside. the deal is struck now, bonds can go 60 to 70.
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it could go even higher if there is political change, it could go higher. eventually come everything works out and it is spot back. -- bought back. stephanie: eric and i moan about this all the time, from distressed investors that europe is the place to be. they have been building teams out there for the last three years. this will be the moment, and the moment has not come to fruition yet. is it now? hans: on the fixed income side a great the upside versus downside in greece is attractive. if a deal does not going greece, the downside could be considerable. if you have just set up a bunch of money rushing to go in and competing for deals on nonperforming loan portfolios, it might be tricky so you might have to wait for a resolution around greece. erik: for you to an, the cyprus
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have to win? hans: i am relatively gnostic. issue on greece government bonds is that they will not be restructured. what they're talking about now is the official sector debt. if you pay jurisdiction, it is only 15% of the total debt stock , they will not restructure this. stephanie: all the hedge funds who raise my to buy assets in base in europe that did not really happen. is that going to this trade? katia: i am not sure. these guys are involved in the big three sovereign debt scenarios. puerto rico and greece. it seems fewer of them are involved in greece than in the other two. we know of night head and i've heard of some other ones as well. everyone is kind of saying, there are fewer guys involved in this one, it is very hard to trade, not very liquid.
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one person mentioned there could be a mammoth player out there holding onto everything and not really trading. but it is hard to build a position. erik: if the issue is the official sector debt, liza private sector trading at such discounts? hans: i think there is a bit of a lack of understanding. debt restructuring, oh my gosh. but i think it is also just a shock. there is no question if a deal does not go through, there might be pressure on the banking system and people may be concerned that at the least, you will get -- going back it is amazing how little liquidity there is in the market, which points to why you could make such a good return very quickly. there is money on the sideline. we have seen bids coming from different brokers. someone is looking to add large positions.
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it could be the overflow money coming from these european recovery funds. the chance of a real upward move and a quick one is pretty high if a deal is announced. erik: how is the situation different in argentina? katia: those guys have made a killing basically just holding their position. the similarity here is the political aspect. every ring is riding on politicians putting their egos aside and getting a deal done. in argentina, it has not happened, but these guys made a ton of money still, which is interesting. it is kind of like the conviction trade is so strong that even at that headline does not move the market because we cannot move -- move this money, because we have built such a strong position it cannot go wrong for us. hans: in argentina, you're not worry about -- worried about the debt to gdp number. the government is pretty unleavened, so it is really just politics.
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obviously, fixing the little geisha problem, you do not quite know what the number is, but what will change is the election. no question, either one of those will solve this and therefore, you see the trigger to change things. greece, it is a little trickier. there is too much debt. but then again, it is a political solution to that problem as well. erik: thank you both. stephanie: now let's check some headlines for you. a new sign this morning of strength in the u.s. labor market. new claims for jobless benefits stayed at historically low levels last week. the government says the number of americans seeking an employment benefits rose just slightly. the low, three hundred thousand, for a 14 straight week. the average fell to the 15 straight low last month.
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during the call for caution on interest rates urging the federal reserve not to raise rates until 2016. the bank's chief economist says it is mixed. the imf issued a similar warning last week. a tighter rate policy could hurt emerging markets. start spreading the news. a frank sinatra centennial party is underway across the river from the city that never sleeps. old blue eyes was born december 12 1915 in hoboken, new jersey. there is a sinatra idol contest airing today. he died in 1998 at the age of 82. those are your top headlines. erik: shares of the biggest u.s. headliners have been on a dissent in the past three months. nine companies including delta southwest and american airlines has dropped 14%. feel prices are all over the
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map. now tiny toilets and carry-ons are the talk of the day. john is the managing director and head of global aviation. he is just completed a comprehensive study of the industry. since you have jobless research what have you learned? john: good morning. the global industry in the u.s. industry is going gangbusters in death at the moment. as you said, stocks are rough over the last three months or so, but i think you have got to put that in perspective. if you look at delta, delta's market was about $8 billion. about $40 billion a couple of months ago and are sitting about $35 billion now. they have come off a little bit from the high they certainly had a massive run-up over the last three years. erik: is the fate of the airline industry from a profitability standpoint really just a matter
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of oil prices right now? john: no. we have seen shifts in the industry over the past five years and it started with the oil spike back in 2007. if i focus at the u.s. industry, we have had a lot of restructuring. a lot of consolidation has taken access capacity out of the industry. what is really underpinning the profitability is revenues. i hate to say it, the pesky bag fees that everyone hates there actually underpinning the profitability of the industry. if i look at the performance of the top three players in the u.s. industry over the last five years, delta american united, they generated returns in excess of the capital, about $23 billion in aggregate over the last five years. within that, over that same time , five years, they actually earned 37 billion in an ciliary
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revenues. if you take an ciliary revenues out, they would not be as profitable as they are today. stephanie: is the answer to the success and turnaround of the industry to not offer customer service? john: we think the u.s. industry now, because it is in a financially stable position, is in a much better position now to offer better customer service. you see some of the initiatives people like delta are doing. it is fascinating. if you go back 10 years ago, you would have thought the industry could never be competitive. erik: i want to interrupt you because we need to run shortly and we need to ask you about pricing. if you look at the data, it suggests the airlines have quite a bit of pricing power but it is beginning to take down. are they losing? i am looking at a chart of domestic average airline fares in america. are they losing that pricing power?
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john: there is plenty of competition in the market. i do not think pricing power is the appropriate way to think about it. people talk about price wars but i get back to the in ciliary revenue thing. akin 2007, the average ticket price round fare was three hundred dollars per today, it is $400, of which $25 is ancillary's. if there is a price war, the 375 ticket price might go down or up, but the $25 of ancillaries will be there to underpin the profitability. erik: i want to say thank you very much. we will be back after this break. ♪
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stephanie: an ugly day out in new york city. a good all day in bloomberg world headquarters. a few minutes from opening belts here in the u.s. tracy is here and mark is a
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portfolio manager. tracy, let's start with you. tracy: number one has got to be questions about a returning u.s. consumer. a bunch of people are excited about people finally spending all the money they supposedly ship -- saved from gas and energy prices. i want to caution that we have had mixed news on the retail funds. we saw yesterday j.crew is laying off 170 five people. sales of not been that good. the new ceo of is laying out his strategy. that chain has been struggling. signs of the consumer coming back, but not all good. stephanie: is that necessarily about the consumer? jcpenney is a store issue. tracy: you can argue these are
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idiosyncratic things. big things have happened in terms of people moving to online retail and things like that and not going to malls anymore. we have had a mixed bag on that front. mark: one of the things is the initial jobless cranked -- claims you mentioned there that is really the biggest correlation, when you see consumers having a job is the most important thing consumers need to have money and you see that in space. impressive jobs numbers. erik: this morning, we get a read which might tell us a little bit more. stephanie: i am sure you all heard of a -- stephanie: i talked about just last night at cocktail parties. tracy: you will know their stock
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more than doubled over the past several days. yet another mystery market mover . no one actually knows why this is happening. the company put out a statement saying we do not know why our stock is up this much. as you remember from last week we had a similar story from china with a hong kong-based stock. its market cap jumped to 5 billion. it is pretty crazy. emerging-market stocks in general have been volatile. others have argued that is not good for the development of markets. stephanie: number three. tracy: concerns in credit. you know everybody has been talking about liquidity issues
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in specifically the corporate bond market. yesterday, we had steve schwarzman writing in the wall street journal that he thought this would be the start of the next financial crisis. the problem is if you are an investor, you have a lot of ways to protect your portfolio against that kind of risk in the credit market. we have seen a lot of big investors get creative when it comes to hedging their portfolio. they have been using the vex. the vex tracks volatility on the stock market. we have bond investors essentially turning to the stock market to hedge their credit risk. how about -- stephanie: the dita's framed the bell the nasdaq the day after nike announced that they have got the exclusive and be a adidas walked away from it? is is interesting. my he is going to crush that business but you get to ring the bell. erik: i think julie hyman might
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have somebody say about nike. julie: nike has indeed signed a contract now with the nba. the company did not disclose what the contract was worth, but a person familiar with the plan says nike is paying a billion dollars for the privilege. it is an eight year deal. as part of this, nike will be the first to have its logo on all of the uniforms. shares are rising by about 2% this morning. checking the price, we are looking for the stock to make a record care at 10550 would be the number two beat. we're also looking at the cloud storage company whose loss was smaller than anticipated. i believe this was the first report by vox as a public company.
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adding more features, more corporate features, to get more enterprise customers for the business. that has been working. not corporate but government there and also other companies in that space. it has of course been competing with a lot of different companies in the cloud business. i finally want to look at lululemon. chip wilson, the founder of the company who stepped down as chairman after some controversial comments over the past couple of years, he is now selling his remaining stake. he has filed to sell 24.1 million shares he and his wife owned. they had roughly a 14% stake in the company even after they stepped aside any kind of management of it. shares are down 1.5%. erik: thank you, julie. stephanie: what does it say when the founder of a company sells all of the stakes?
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>> i will say at least he did not sell out at the bottom. he got a group of people to fix -- to pick it up and i think almost double off the bottom. stephanie: in general, when you see someone who knows the dna of the company, when they walk away and do not maintain a stake anymore, should it change our view of what we think about the future of the company? collects not necessarily in this case. you should not worry too much about it. i have got to think there are a lot of things we do not know. this is a guy who has had clashes with boards for years and years and years. it is not a complete surprise he walks away. erik: are you a believer in the idea that leisure wear is a lasting trend? >> it seems to be. you were talking about j.crew
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and jcpenney. apparel, that is not where consumers are buying things. the only area is a leisure wear area, up 20 plus percent. stephanie: i'm driving the leisure market. >> that is where you are seeing the biggest bang for the buck for sure. erik: what is hidden in some of these numbers, i think millennials do not care as much about jcpenney, they may not care as much about j.crew. they care about spotify for $10 or a new phone. that is where i think a lot of the consumer spending is this time than last time. one of the easiest ways, you're talking about financials and yields. the company we own, which i think is dirt cheap, discover financial, it is a credit card company that is extremely inexpensive. when consumers are really back with a vengeance, spreads on treasuries is widening and that is a good backdrop, this is a
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company of buying back a lot of stock and has the highest capital ratio of any financial company in the dodd-frank test over 14% tier one, when consumers keep spending money, they pay for all the services i just talked about on the credit card it is actually a very good way to play it. stephanie: our consumers in general looking to pay for services and not goods? when i think about millenial's and what they're interested in it is not hard goods. >> you are right. it is that ecosystem or whatever the phrase is around whether your apple device and the things that go with it, the services, that seems to be the bigger deal, and broadband service. all of this is nowhere -- >> since we're talking about millennials, are you a believer that millennials will not buy cars? >> no. they will jive cars. the question is whether it will be tesla or a regular gas engine or a car sharing service, but
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no. stephanie: if it is a car sharing service that has got to hurt auto sales long-term. mark: i do not think so. it would have been cap driving or a rental and now they will use cars more. the facts are the rate is 18 million cars right now. the facts show you car sales are best they have ever been. we have a theory but it is doing very well. i think ford is a great way to play it. they are at the beginning of a product cycle. the best-selling car in the united states is the f1 50, pickup truck. gasoline is still lower than it used to be. it is a lighter car, an all-new aluminum body. there at the beginning of a product cycle here. this is a tough industry to invest in. when you can get it with the consumer doing as well as we are
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talking about, and the product cycle actually ford is a very good way to play that right now. stephanie: thank you so much. the honda odyssey is my favorite. thank you, mark. erik: coming up, president obama sends more troops to iraq. we will get more reaction with adam smith coming up next. ♪
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erik: breaking news. we told you moments ago about chip wilson. his company has a response and vonnie quinn in the newsroom will share it with us. vonnie: the controversy is
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ongoing. the response now from spokesman saying he is allowed to sell the remainder of his stake in the company. dropping down now 2.4%. still at 16% this year. you can expect to see more on this story. lululemon filing a 20.1 million share -- it would allow chip wilson and his wife to exit their stake. it is roughly 14% stake and follows settlements of the dispute with wilson and lululemon. he said it is unhappy with the direction the retailer took after he had left that position. erik: thank you for clarifying as well. stephanie: this is crazy to me. this is the founder of the company. he does not need the money. all he has got left, especially when the companies doing so well like, i do not know. i do not like it.
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erik: let's look at some of the other top stories happening. the mers outbreak in south korea is worsening. 10 people have now died from middle east respiratory system -- more than 3000 people are quarantined. the central bank think the outbreak of this disease could lower consumption and hurt the economy. the bank cut interest rates to a record low as a result. a 50% stake in its north dakota pipeline and processing units selling. it is a cash deal, $2.7 billion. hess is the most active driller. an actor died, best known for his role as count dracula early in his career. later, he was in lord of the rings and appeared in star wars clone wars. that was a star wars episode i
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passed on. i did not see that. christopher lee was 93 years old. stephanie: was that the first new one? erik: i think it was the second one. stephanie: i was at the premiere of it when it came out. it started at midnight, which is tough for me. i couldn't understand what he said and i was struggling. erik: i am hoping for so much more from jj abrams coming this christmas. president obama is going to send 450 more troops to iraq. the purpose is to train iraqi forces. these troops will not play a combat role to we want to know how it is playing on capitol hill. peter cook is standing by on services committee. peter. peter: i am joined by adam smith, a top democrat on the armed services committee. thank you for joining us. your reaction to what we heard
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yesterday in the white house the president will raise the number to about 3500 in iraq right now to train the iraqis do not take a combat role. adam: i think that is the right approach pair what we need to do is train partners in the region to fight isis. it cannot be leading this fight. as we learned in iraq and afghanistan, that part of the world does not take on me to large military presence coming in and then leaving the fight. it has to be driven by the local population wanting to defeat isis. the struggle is, how do we get what has become a shia sectarian government in baghdad to change its policy so sunnis would fight for them? so people will be training so they feel they have a government fight for. if that does not work, who do the sunnis fight for to oppose isis? where do they get their support coming from baghdad? that is what i'm concerned about.
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peter: the speaker boehner questioned whether or not this is a larger company has a strategy. adam: i think there is a larger comprehensive strategy but one of the cornerstones is rebuilding a true power-sharing arrangement in baghdad so sunni and shia all feel they are invested in iraq. i think that is a cornerstone of the strategy and it is hard to see that happen given the way a molecule ran the government. he may want to do better but he is responsible to a parliament and a defense minister and interior minister who do not seem inclined to do better. that is the strategy. is it the right one? adam: how --peter: how is the fight going? adam: the whole ideology al qaeda, boko hernan come, it is the whole violent extremist
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ideology that gave rise to that. the government alternatives are collapsing all across the middle east and north africa and empowering the north radical extremists. how do we defeat that ideology particularly because the u.s. cannot know in there and do it because we are not popular in that world. how do we build partnerships to convince the overwhelming majority of muslims who are moderate to fight and defeat not just isis but the broader ideology. it will take a while. peter: another topic on capitol hill especially for democrats given where the president is that is trade. the house will vote on trade authority. given the fast-track trade authority, one of the democrats who has not publicly announced your position yet, he faces a lot of opposition. adam: it is tough and i am still undecided. i am leaning against it. i certainly want to see us held
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partnerships and relationships in that part of asia. but is this trade agreement going to do enough to help working people in the united states? there are a lot of reasons for it. the competent -- the wealth and downgrading of combined power in america, the bottom 90% of wage earners in the last 30 years i think is the number one social justice and economic problem we face. does the agreement do enough to address that in the right way that is what i will be looking at. peter: a state that is the most trade dependent in the nation what does that say? adam: workers have not benefited enough from the economic growth that is happened because of the global economy. i want to see evidence that u.s. government policies will change so that your average worker starts to see some benefit from this instead of just the top 10%. peter: thank you very much for
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joining us here on bloomberg. a big vote tomorrow on the house of representatives on this bill. again a democrat here, key to the president going forward still undecided where he will go. erik: thank you, peter p or when we come back here on market makers, a device that could help hundreds of thousands of people with spinal cord injuries. the challenge, it is not cheap. more than $70,000. we will be to the ceo to see what he is doing to make the product more accessible. ♪
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erik: a company founded in israel found a way to help people with spinal cord injuries walk again. re-walk created so skeleton system. there is a big obstacle, dollars. $71,600 is what it costs. the ceo is with us now. lawrence, that is an obstacle
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for insurance companies. five years from now, can you get it down to 50 grand or less? >> it will be like a lot of technologies. you will see these technologies advance and the pricing will change. think about cell phones and the way they were 20 years ago, 10 years ago, five years go. this is an amazing new technology. the parameters will change for everybody. stephanie: in terms of insurance ever company -- covering this what is the likelihood? lawrence: hi. this device probably pays itself in about two years. in the united states the veterans administration 10 days after the fda gave clearance decided to provide these for veterans face on their own data. there is a huge health benefit and to have artie found a number of u.s. and german insurers who
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on a case-by-case basis has given us to people so they can go back to work and they are given to people who have private insurance as well. we as a company, one of our key initiatives is to build the data and the process for everyone to be able to get this reimbursed because of the value it provides. erik: if the v.a. gets it why don't more insurance companies get it? you have got two american insurance companies who do support the product -- the project, but the rest don't. lawrence: we have a total of four american insurance companies paid to use in america -- in everyday life. several more are pending. the number will keep growing on a case-by-case and week by week and state-by-state basis. erik: from a business standpoint. your stock rocketed and that -- now it is back down and clearly anyone who got in after the ipo probably lost some money.
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what is to explain this? does it all come down to how many americans have access to it because it is supported in europe, paid for by the government health insurance system in canada? lawrence: i think initial excitement is about the potential for exoskeletons. they are incredibly life changing product. this market potential, if you look at the wall street journal, it sees it as a $2.2 billion as the end of the decade. the key for driving for anybody of industry will be topline growth and our ability to build the infrastructure so everyone can get these because they make such a difference that the value is there. we have to execute. stephanie: the last two quarters, you have missed analyst estimates. what is your game plan to turn that around? lawrence: foundation building. we hired a reimbursement team. a lot of people started with us
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in january and have function effectively. what we really need is for somebody to have the need for nexus kelton we can handhold and take all the way through the system with our insurance company, help them with a physical therapist, help them with the insurance companies, so they can completed. that process will take longer than we thought, but we also gave annual guidance or the year and we expect we will get annual guidance for the year. we do not get quarterly guidance at this point. erik: thank you very much lawrence, the ceo of re-walk come a product that can help people with spinal injuries walk again on their own. stephanie: revolutionary. thank you. erik: that will do it for us. keep watching. tonight on bloomberg television, a view of one of the world's largest companies simply will not get anywhere else care to have a look. >> the biggest project of its
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kind in the world. erik: you know i love helicopters more than just about everything else. what is going on in australia is beyond competition. 54 billion dollars, the largest resource project is underway globally if i'm not mistaken right now. but it is risky. $17 billion over budget. stephanie: you can spirit -- experience it tonight at 10:00. don't miss it. ♪
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olivia: good morning. it is 11:00 p.m. in tokyo. erik: you're watching bloomberg market day. olivia: americans finally spending more on close and home
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appliances. it is a shot in the arm for the u.s. economy. erik: chevron is suffering along with the rest of big oil but ceo is not sweating these. my exclusive interview with john watson. olivia: computer code dominates the world. if you want a promotion, it might be time to learn how to do it. ♪ olivia: good morning. erik: something is happening in financial markets. stocks are up again. let's have a look to show you where things stand right now. the s&p 500 up 5.4%. a little more if you look at the doubt. it brings us to the best rally since may 8.

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